Annual Market Review 2015-16: A cause for optimism?
13 July 2016, Jo Prowse, Chief Executive
I hope you picked up the Annual Market Review we published yesterday, which was conducted for us by Mobilesquared. Those of you who are eagle-eyed will have noticed that we shifted the AMR from calendar year to financial year.
You will have also noticed that the market has outperformed expectation. While a drop in total revenues of 0.26% might not seem that impressive, it follows average declines of 4% per annum over the last five years. It strikes me as a cause to be optimistic.
This relative stability has been built on strong growth in a number of sectors
Music and video content, games and gambling have all experienced double digit growth. Charity, too, continues to perform strongly - it is now the largest market sector by some distance. Underpinning much of this growth is operator billing. Transactions via operator billing and PayforIt grew by 55% from 2014/15 to 2015/16 and is expected to grow by a further 51% this year. Indeed, the market is predominately mobile and increasingly so.
The AMR portrays a market in transition
Voice-based services and DQ continue to experience sharply declining revenues as consumers increasingly turn to free or lower cost alternatives. Other legacy services will likely face a challenging environment. For example, adult services are expected to decline by 23% and tarot by 11% this year.
So where does Mobilesquared see the market going in the near and medium term?
The period of relative stability is expected to continue, again, underpinned by growth in games, gambling, giving and music and video content. More broadly, Mobilesquared also noted that existing PRS consumers were drawn to the idea of paying for more services using their mobile bill; train and bus tickets, car parking and gig tickets all resonated with existing PRS users.
But there is a nagging sense that the industry hasn’t fully grasped the operator billing opportunity – a point Mobilesquared picked up on. Though much of the task of making the most of the opportunity is down to the industry, we, too, have a role to play.
We are working to streamline our regulatory framework to promote competition and innovation, while ensuring we have the appropriate tools in place to protect consumers. This project is part of a wider set of initiatives designed to ensure we remain fit for purpose in our 30th year.
We are currently engaging industry stakeholders in developing proposals to make better use of the regulatory tools available to us. We aim to reduce the regulatory burden on services that can control risk effectively and increase certainty and consumer protection for services that can objectively be considered higher risk. Once they have been worked up we will seek your views. Look out for a consultation on proposals shortly!
If you haven't done so already, here you can access the Annual Market Review 2015-16.